Later that evening, Roger and I were sharing a booth in the back of Hanrahan’s, our new friendly neighborhood watering hole ever since the old P&G had been forced to relocate six blocks uptown, losing both its clientele and its juju, and blinked out of existence in a New York minute.
Roger was a semi-retired clown—thirty-five years with the circus, three shows every Saturday and as many as could be booked the rest of the week. He did the circuit—Miami, Florida, to Bismarck, North Dakota, San Diego to Boston, living on a bus eleven months of the year—until he’d had enough and one day he just ran away from the circus. For the past ten years, he’d supplemented his pension by performing once or twice a week for anything from birthday parties to sales meetings to bachelor parties—his stage name was Jacques-Emo. His act could be corny and cute or ragged and raunchy, depending on the audience, and, I suspected, how much cognac he had consumed on the way there.
He was also my friend. We’d started as bar buddies—one drink’s distance from being total strangers—but my life had taken some unexpected turns. Roger had helped me through one of the rougher patches. So, despite his lack of almost any social graces, I knew that I could depend on him. And, over the last few years, I had come to value much more highly the few people who had stuck by me.
“So, ya trust ’em?” he said when I had finished telling him about my day.
“No.”
“That’s good.”
“But I can’t see how I get hurt.”
“Yeah, but they’re creative. Don’t forget.”
Roger had his usual snifter of cognac; I was drinking club soda. My stomach thought we were still on the helicopter, and I was due to pick up my son from his sitter shortly.
“I’d love to come up with something the Feds missed. It would be sweet.”
“Think you’ll do it?”
I wanted to. I gave it a moment’s thought. “No. The Feds have hundreds of people working on this.”
“So, you’re cheatin’. Takin’ these people’s money on false pretexts. No chance of getting them what they want.”
“Pretenses.”
“What?”
“False pretenses.”
“So, you admit it.”
“No.” I laughed. “I will do what I do and make sure they get their money’s worth. I just don’t know if I’ll find it.”
“I don’t trust ’em.”
“I don’t have to trust them,” I said. “I don’t even have to like them.”
“Watch yourself.”
“Will do.”
Roger knocked back the last drops in the small snifter and waved the empty glass at Nick the bartender, who gave a serious nod in reply.
“You don’t get a good pour here, you know?”
I had not noticed that. My usual was a bottle of light beer, and twelve ounces was twelve ounces. “Maybe you’re drinking faster,” I said.
He stared at the pressed-tin ceiling long enough that I was beginning to think he’d forgotten I was there.
“Roger?” I said.
“Yeah, yeah. Here’s what I’m thinking. You say this whole thing—the bank thing, or whatever—was nothing but a Ponzi scheme, right?”
“Classic.”
“Okay, so here’s my question. Who the fuck was this guy Ponzi?”
“Long version or short?”
“I hope that’s not a short-person joke. I’m very sensitive about my height.” Jokes about his stature were a staple of his act.
“Then you get the long version.”
“Nyah, just give me the broad strokes.”
“When’s the last time you had a broad stroke you?”
“Hey! I make the jokes here.”
PaJohn came over carrying Roger’s drink and his own scotch rocks. John was one half of a mature gay couple—PaJohn and MaJohn—both retired, who had been longtime regulars at the old place. PaJohn was drinking solo that week, as MaJohn was visiting his mother in Boca. They were rarely seen apart.
“Mind if I join you? It’s a Mets crowd at the bar today, and I don’t know if I can stand listening to any more tragic love stories.”
“Come, sit,” Roger said. “Jason’s about to tell me all about Ponzi.”
“When does John get back?” I said.
“He lands Friday at seven-thirty-two, and I am counting the hours.” He turned to Roger. “Carlo aka Charles Ponzi? Why do you want to know about him?”
“I didn’t say I wanted to know. What I said was, Jason’s gonna tell us.”
“Is this something you’re working on?” John asked me.
“I will be discreet,” I said. “I’m not breaking client confidentiality.”
“Then I am all ears. Though I warn you, I once got Carlo Ponzi as a Trivial Pursuit question.”
“Oh, yeah?” Roger challenged.
“Yes. And I got it right.”
“I never doubted ya.” Roger took a long swallow and shuddered. “That’s better. Ponzi. Let’s hear it.”
“Carlo Ponzi,” I began. “He was a small-time con man, a grifter, a thief. He spent time in prison here and in Canada before he came up with his one big-time game. It wasn’t original—he basically stole the idea. But, for that time, it was big. He stole fifteen million dollars, back in the day when that meant something.”
“When was this?”
“After the First World War,” PaJohn answered.
“That explains why I don’t remember any of this.”
“It’s like two hundred million in today’s money,” I went on. “The con itself was really pretty simple. People gave him money to invest. He promised them, I don’t know, twenty percent or something outrageous, for ninety days.”
“How was he going to make ’em that kind of money? That’s way too good to be kosher.”
“Exactly. But he had a good story. Back then, when people overseas mailed a letter to the U.S., they could include a return stamp issued in their own country. It was way cheaper than buying the stamps here.”
“Stamps? Postage stamps?” Roger said.
“Bear with me. The U.S. postal system had to honor these stamps, or, if the customer asked, redeem them—for the price that a U.S. stamp would go for.”
“Wait. We’re talking pennies here. Nickels, maybe. How’s he supposed to make any real money with this?”
“Well, he’s not. But all the immigrants he sold on this had pulled this off themselves, or knew someone who had. Mamma back in the old country sends a letter with the return prepaid—for a penny, let’s say—and her daughter in America cashes it in for a nickel. That’s a return of four hundred percent.”
“Stop!” Roger squawked. “You’re making me nuts. This is still all about pennies. How does this Carlo guy turn this into fifteen mil?”
PaJohn had been listening quietly, nodding occasionally, but here he cut in.
“I’ve got it. He never buys a stamp. Not one. What he does is, he sells the story. That’s the con.”
Roger looked to me for confirmation.
I nodded. “That’s it. He managed to convince people that he could do this stamp arbitrage on a huge scale and make a fortune at it.”
“Could he?”
PaJohn took a loud slurp of scotch.
“What?” Roger took offense.
“Not you,” PaJohn said. “I had dental work done this morning, and the novocaine hasn’t worn off yet.”
Roger appeared mollified. “So, could he?”
“No,” I said. “Not a chance. The post office made you fill out forms and only redeemed the stamps one at a time. It was okay for somebody trying to scam four cents—or even eight, or maybe twelve—but it would never have worked on a hundred bucks, much less a million.”
“But people bought into the story.”
“That’s the con.”
“So they gave him fifteen mil to hear a story.” He had it.
“He played it well,” I said in agreement. “The first guy in had ninety days to brag about it to all his friends. Of course, they had to get in on it, too. When the ninety days were up, the first guy got paid off. Full return of principal plus twenty percent profit. Of course, the profit was coming from the money his neighbors were putting in.”
“Sounds like you want to be the first one in on a deal like this,” PaJohn said.
“Maybe, but think for a minute. What does our guy do when he gets home? He brags to his wife about what an investment genius he is, right? Look at this, he says, waving the money in her face. I’m another J. P. Morgan.”
Roger burst out laughing. “Only she says, ‘You putz! Why did you take the money out? A real J. P. Morgan would have left it there and let it ride! You’re nothing but an ignorant greenhorn, like my mother always said.’”
“There you go. Who would take their money out when they’re earning those kinds of returns? Of course, if somebody needed the money, Carlo would pay it out. Cash. Why not? He was sitting on a pile of it. And every time somebody took money out, it just made the whole con seem safer. Better.”
“It stops working, though, the day everybody wants their money at once. Then he’s screwed.”
“That’s what caught Madoff, wasn’t it?” PaJohn asked. “The market dipped, dipped again, then dove. When the dust cleared, people asked for their money back. When they didn’t get it, they panicked, and when people began to panic, they all panicked at the same time.”
“So, how’d Carlo get caught?”
“Too successful,” I said. “Some post office official read about him in the newspaper and knew the story just wasn’t possible. He went to the cops, and that was all she wrote. And Carlo Ponzi became famous, if not rich.”
“What a schmuck,” Roger said.
“Amen to that.” PaJohn raised his glass.
We all finished our drinks.
“Whose round?” Roger asked.
PaJohn and I both raised eyebrows. According to Roger, the last round had always been his and the next was always someone else’s.
“I got our first round,” I said.
“And I bought the one you just finished,” PaJohn chimed in.
“So . . .” I said.
“Okay. Okay. Jeez, you guys act like I’m some kinda cheapskate.” He handed PaJohn a twenty. “I’ll buy, but you gotta get ’em.”
PaJohn had the outside seat on the booth. “Be right back. What’s yours, Jason?”
“Nothing. I’m out of here. Time to free my son from the clutches of his tough-love shadow.”
PaJohn slipped out and headed to the bar. Roger put a hand on my forearm. He spoke softly and urgently.
“This guy Von Becker looked people in the eye, lied to them, and took their money. You think his kid there really wants to give it back? Three billion is not like finding some guy’s wallet in the back of a cab and mailing him the ID and credit cards.”
“What about the cash?”
“Expenses.” He grinned. “Stamps and shit.”
“Envelope.”
He nodded in agreement and raised his empty glass. “And, I got overhead.”